Bangko Sentral ng Pilipinas (BSP) Governor Benjamin E. Diokno has signed a memorandum order requiring all BSP supervised financial institutions (BSFIs) to immediately implement the one-time 60-day grace period on loans as mandated by law under the “Bayanihan To Recover As One Act” (Bayanihan 2) or Republic Act No. 11494.
In the memo signed on Friday, Diokno said BSFIs “shall not charge or apply interest on interest, penalties, fees or other charges during the mandatory one-time 60-day grace period to all loans that are existing, current, and outstanding falling due, or any part thereof, on or before December 31, 2020.”
He said the 60-day grace period will apply to an individual’s every loan and entities with multiple loans.
“The accrued interest for the one-time 60-day grace period may be paid by the borrower on staggered basis until December 31, 2020. Nonetheless, this will not preclude the borrower from paying accrued interest in full on the new due date,” said Diokno.
Both banks and borrowers may reach an agreement or “all parties may agree to a grace period longer than 60 days, and/or payment of accrued interest on staggered basis beyond December 31” this year, he added.
The one-time 60-day grace period of the Bayanihan 2 was from the Senate side and it was preferred by the banking and business community versus the Lower House’s proposed 365-day ban on loan payment.
The banking and business groups said they fear the economy will not recover as hoped for and will be in fact damaged if the proposed one-year moratorium on debt payments.
Diokno himself had warned that such a long period of non-payment of loans could lead to bank runs and affect the availability of much-needed credit to recover from the impact of the pandemic.
The BSP has been conducting a comprehensive, baseline survey of all banks and non-banks to assess how the pandemic has affected the financial sector. The data they will gather will review the financial and operational impact of the COVID-19 pandemic on banks, particularly on asset quality, liquidity position, profitability, capital position, as well as the impact of increased digital business.